To recover unpaid retention money, first confirm it has fallen due under your subcontract. That is usually at practical completion for the first part and after the defects rectification period, or final certificate, for the balance. Then send a formal written demand. If a notified sum is due and the contractor has not served a valid pay less notice, the sum is generally payable. You can then refer the dispute to adjudication, which normally produces a decision within 28 days of referral. The proposed retentions ban will not instantly release money already withheld, so act now.
When does retention become due?
Most construction contracts release retention in two stages. The first release usually follows practical completion. The second follows the end of the defects period, often 12 months, once defects are made good and the relevant certificate or sign-off has been issued. Your own subcontract sets the dates and conditions, not the main contract alone. Pay when paid clauses that delay your money until the client pays are generally ineffective under the Construction Act, except in limited insolvency situations. Our guide to construction retentions and late payment explains the usual timeline.
Step 1: prove what is owed
Gather the subcontract, applications for payment, valuations, payment notices, certificates, the practical completion date and evidence that defects were fixed. A mistake we often see is subcontractors waiting for the contractor to release retention unprompted. Write to them with the exact sum, the clause that makes it due and a clear payment deadline.
Step 2: challenge any deduction
A contractor who wants to withhold money usually has to serve a valid pay less notice on time. Without one, the notified sum is generally payable in full, even if they later allege defects. Check the timings against our guide to applications for payment and pay less notices. You may also be able to claim 8% statutory interest above the Bank of England base rate on a late commercial payment, plus fixed compensation where the Late Payment of Commercial Debts rules apply.
Step 3: use adjudication
Under section 108 of the Construction Act, a party to a construction contract can refer a dispute to adjudication at any time. The adjudicator must usually decide within 28 days of referral, extendable by 14 days if the referring party agrees, or longer if both parties agree. The decision is binding unless and until the dispute is finally determined by litigation, arbitration or agreement, and the courts can enforce it.
For a clear retention claim, adjudication is usually faster and cheaper than ordinary litigation. For smaller sums, professional chasing through our construction debt collection team can resolve matters before formal action.
| Situation | Sensible next step |
|---|---|
| Retention due and no pay less notice served | Formal demand, then adjudication |
| Withheld citing defects | Evidence of rectification and a challenge to the deduction |
| Small sum and a relationship to protect | Professional chasing before formal action |
| Contractor insolvent | Proof of debt and a check for trust wording |
| Several years since it fell due | Act quickly, as simple contract claims generally have a six-year limit |
If the contractor is insolvent
Unless retention sits in a ring-fenced account or trust, you are normally an unsecured creditor, and recoveries can be small. Check your contract for trust wording and read our guide to recovering debt from insolvent customers. Running credit checking before you take on work, and considering security beyond personal guarantees, helps avoid the problem.
What the retentions ban means for you
The Commercial Payments Bill would introduce a phased ban on retention clauses in the construction sector, but it is still moving through Parliament, and the Bill page shows its current stage. The proposals include transition arrangements, so money already withheld is not simply released overnight. Our guide to the retentions ban sets out the likely practical effect. Treat what you are owed now as a debt to recover under your current contract.
Getting paid
If retention is stuck across several jobs, outsourced credit control keeps claims moving. Our international debt collection service helps where the paying party sits overseas. Speak to our team for a free, no-obligation review of what you are owed.
